Site Navigation

Site Mobile Navigation

Diamond Junk

Standard & Poor’s and Moody’s have finally discovered something New York baseball fans figured out last summer. The New York Mets are junk.

O.K, that is not fair. But the New York City bonds issued to build CitiField have been cut to below investment grade by the rating agencies. The agencies blame the cuts not on the Mets’ woeful performance last year but on the standing of the bond insurer Ambac, which guaranteed many of the bonds.

Ambac is all but broke, with ratings in the nether worlds of junk.

Most of the bonds were sold in 2006, but some were sold in 2009. Ambac guaranteed the 2006 bonds, when it still looked like it was healthy. A guarantor that looks more solid now, Assured Guaranty, backs the 2009 bonds, but because of cross-default clauses and a separate Ambac guarantee that would click in if there were a strike or something else that closed the stadium, those bonds were also downgraded.

Getting stuck with Ambac is no endorsement of financial wizardry in Queens, although it is also true that the city government, which formally issued the bonds, approved the choice.

At least the Mets managed to sell the stadium naming rights before that market caved, even if the buyer did need to be rescued by the government so it could keep paying the money.

I am, for all this, a Mets fan. (I identify with underdogs, which the Mets were when I moved to New York in 1978, and which they are once again.) Spring training starts in eight days, with pitchers and catchers reporting, and I am sure I will find something to be hopeful about.

The original post included commentary based on the misunderstanding that Ambac guaranteed the bonds issued in 2009. That was in error.

The Affordable Care Act imposes economic burdens that are the equivalent of taxes, an economist writes. Read more…

About

Economics doesn't have to be complicated. It is the study of our lives — our jobs, our homes, our families and the little decisions we face every day. Here at Economix, journalists and economists analyze the news and use economics as a framework for thinking about the world. We welcome feedback, at economix@nytimes.com.